Food and Beverage Management, Fourth Edition ( PDFDrive )

Contract, travel and public sector catering

Product and service styles • • •

Counter service and take-away service styles tend to be the pre-
ferred service style for such operations, however buffet style
and self-service may be used. The main products are snacks and
take-away food, so product packaging can be important as some
caterers may have limited seating space and employees may also
chose to buy the product and consume it later.

Staffing • • •

These operations tend to be staffed by regular members of staff.
Caterers will often have other operations in nearby sites so staff
mobility between operations can be an option. This flexibility
can become important especially when there is need to cover
staff leave or sickness periods from one outlet to another.

Technology • • •

Food holding technology is very important. An off-site cen-
tral kitchen may be used that supplies a number of operations.
Ensuring that the quality of food is maintained through the
transportation and delivery is paramount. Electronic point of sale
(EPOS) technology can help with forecasting of sales thus redu-
cing wastage. Communication technologies such as access to host
company electronic boards or intranets and group mailing lists
can be a great advantage to the caterer for marketing purposes.

Event management

An increasingly important area in Hospitality Management
is that of Event Management. Although event management
involves all those aspects that are required to organize a success-
ful event, the provision of food and beverage is often of para-
mount importance to guarantee the success of the event. Policy
decisions relating to function catering are largely determined by
a number of characteristics inherent in this type of catering. The
first is the season. The second is the concentration of events dur-
ing these months, which are mainly at weekends, particularly
Friday and Saturday events, during which time an operation
must seek to maximize its sales potential. Third, a considerable
amount of information is available to the caterer in advance of
the organized functions; this includes the number of guests to
be catered for and for which meal periods, for example lunch or
dinner; their time of arrival and departure; the menu they are to
be given and the price being paid per guest.

The basic policies relating to function catering are usually quite
specific to this form of catering. If function trade is an establish-
ment’s only source of business then the policies laid down will
only relate to this type of trade. In other establishments, however,
such as hotels, the function facilities may be one of a number of
catering outlets, although even in these organizations the ban-
queting department will often have policy decisions relating spe-
cifically to this department.

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Food and Beverage Management

Activity 1

In groups of 3 plan an event. Use a brainstorming session to
identify the event concept and key considerations with planning
and managing of the event. The event concept can be based on a
specific theme, for example an Italian Evening or a Casino Night.
You are only limited by your imagination.

Banqueting and functions and large-scale events • • •

Function and event catering may be described as the service
of food and beverages at a specific time and place, for a given
number of people, to an agreed menu and price. Examples of
function catering include social functions, such as weddings and
dinner dances; business functions such as conferences, meetings
and working lunches; and those functions that are organized for
both social and business reasons such as outdoor catering at a
sports event, show or exhibition.

Function catering is found in both the commercial and non-
commercial sectors of the catering industry. The term ‘banquet-
ing’ can often be used within hotels to describe the department
that deals with function catering. The typical hotel function or
banqueting ‘season’ runs between the months of October and
May with the busiest months being December and January. For
the rest of the year some of the facilities may be used for provid-
ing separate restaurant facilities for tour groups who normally
have limited time available for meals and whom the hotel may
wish to keep apart from the normal day-to-day restaurant busi-
ness. The function facilities may also frequently be let on a day
or half-day basis for such occasions as antique shows, trade
exhibitions, fashion shows, etc. where the requirement of food
and beverages may be very limited.

This function season is more noticeable in certain types of
establishments, particularly those organizations whose sole
purpose is function catering, and those that offer purpose-built
facilities such as hotels. In other establishments such as public
houses, department store restaurants, industrial cafeterias, etc.
the function season is not so evident, as existing dining facilities
are usually adapted for function events rather than specific facil-
ities being available; however, even these types of operations are
still likely to experience peak periods during the year when the
function facilities are in greater demand than at other times. This
characteristic fluctuating of demand associated with function
catering has implications for such establishments’ basic policy
decisions, and these are discussed below.

Financial implications • • •

The logistics required for such events can be extremely compli-
cated. Often the event might take place in a location that there
is no production capabilities and the food and beverage will
have to be produced at another site and then transported and

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Marketing • • • Contract, travel and public sector catering

served on-site. For the company taking on such a project there
are the additional costs of transportation to take into account.
When negotiating the contract the caterer will have a number of
ready-made and costed menus but often in events such as wed-
dings the customer might require a very specific product that
the caterer will have to customize. Using the wedding as event
example, beverages will often be included in the cost per head
or cover. Meaning, cost per customer. Because the margins per
head are normally very small the caterer makes the money on
the volume of the event.

The pricing structure for an establishment’s function cater-
ing facilities will be largely determined by its cost structure,
with particular reference to its fixed and variable costs. This is
most in evidence in the non-commercial sector where functions
may not be fully costed, that is not taking into account the fixed
costs of the operation. Where the costing of function menus is
based mainly on covering food and labour costs, it is important
to remember that both of these increase with the size and qual-
ity of function offered. However, due to the volume of sales the
food and labour costs as a percentage of actual sales will slightly
decrease; it is necessary therefore to not only consider the food
costs per function but also the potential benefits to be gained
from a reduction in labour costs. There are a variety of pricing
structures that may be used for costing functions, the adop-
tion of any one being determined by such factors as the type of
organization, the standards of food and beverage service to be
offered, and the cost structure of the establishment.

There is such a varied type of events that a catering company
or a hotel banqueting department may use any of the traditional
marketing such as Leaflets, radio, TV, magazine and newspaper
adverts. According to Brewin Dolphin, a financial research com-
pany, the market for weddings is worth £4.2 billion each year
with the average wedding to about £16,000 no wonder hotel
banqueting departments and contract catering operators are
competing for this lucrative segment.

Sample function menus produced by an establishment need to
be of a good quality and appearance as the customer will often
wish to take them away to study before deciding on the function
menu. These sales tools should also be of a standard consistent
with the level of operation and the type of image it is trying to
project. Function ‘folders’ containing details of all the differ-
ent facilities offered by an establishment are often produced by
organizations which may be distributed to prospective clients
advertising the establishment’s function facilities.

A function ‘folder’ often colour-coded for easy reference by
the client, would most likely be composed of the following:

1. An envelope type folder with the company’s logo, title and
address clearly displayed.

81 • •

Food and Beverage Management

2. A personal letter from the function/banqueting manager to
the client.

3. A list of function rooms together with details of the numbers
that could be accommodated for different types of functions,
for example a formal lunch or dinner, a dinner dance, a buffet
type reception, a theatre-style conference/meeting, etc.

4. Plans of the room with basic dimensions, position of power
points, telephone points, ceiling heights, etc.

5. Sample menus for lunch, dinner, buffets, meetings, etc.
6. Details of audio-visual equipment available for meetings, for

example lecterns, microphones, overhead projectors, screens, etc.
7. Details of accommodation facilities available, often at special

rates for guests attending a function/meeting.
8. Coloured postcards of the hotel/function rooms.
9. Relevant simple maps and parking arrangements where

necessary.

Product and service styles • • •

The product may vary depending on the type of the event and
it may be anything from buffet style service to full table service
depending on the customer request. Silver service and family
service styles are quite common when table service has been
requested. Functions may include a reception stage where canapés
and appetisers are served by “satellite waiters”. This is often
known as the Butler style of service.

Staffing • • •

Caterers as well as banqueting departments will normally have
a core of staff and will then use agency staff to cope with larger
events. Because of this the quality of service may suffer as the
operator cannot guarantee the skill level of the agency staff.
Some contract catering companies train their own casual staff
and they then have a ‘Bank’ of casual staff that they may call
upon when needed.

Technology • • •

Food holding technology is very important to contract caterers.
Because the business is more predictable as the numbers of cus-
tomers are known hotel kitchens may use their staff to prepare
the food for a large function before hand and load it to already
plated to specially designed racks that can fit into combination
ovens. Food can then be either completely cooked at the time
needed and served straight from the racks or pre-cooked/chilled
and then re-constituted.

Sport venue catering

Sport venue catering includes catering offered in stadia, football,
cricket, rugby, horse racing venues, private health and fitness
clubs, golf and other sports. The sector is hard to quantify as each
country has a large number of venues and catering operations
are largely fragmented. In 2004, Mintel was estimating the sector

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Contract, travel and public sector catering

in the UK to worth £354 million. With the introduction of new
venues since 2004 including the Wembley and Arsenal Stadia in
London in 2007 and 2006, respectively, the UK sector is estimated
to exceed the £400 million mark in revenue today. In the UK there
are 365 stadia whilst the USA currently has 1,726. With 9,379 sta-
dia around the world (Table 3.2) the revenues generated through
the sale of food and drinks alone must be well over the £10 billion
mark today (Figure 3.2). There are three common types of con-
tracts often found between caterers and venue operators. The first
is where the venue takes a percentage of the revenue generated by
the contract caterer (performance guarantee). The second is where
the venue simply leases their facilities therefore enjoying a fixed
stream of income (total risk). The third is a relatively newer type
of arrangement where both caterer and venue work in partnership
setting a joint venture and splitting the profits generated equally
(profit and loss concession) (Mintel Reports, September 2004).

Financial implications • • •

With approximately 9% of the world’s stadia having a capacity
of over 30,000 the logistics required for the catering of such large

Number of
venues

Africa 525
Asia 884
Central America 260
Europe 3,780
Middle East 424
North America 2,125
Oceania 260
South America 1,121

Total 9,379

Table 3.2 Source: http://www.worldstadiums.com
Number of stadia around
the world

Stadia number World stadia per capacity

300 258
250

198
200

150 99 114
100
33 41 49
50 3 8 15

0

Figure 3.2 Number of OOOvvvOOOOOOOeeevvvvvvvrrreeeeeeerrrrrrr21150069538740000000000,,,,,,,,,,000000000000000000000000000000
world stadia per capacity
(Source: http://www. Capacity
worldstadiums.com)

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Food and Beverage Management

operations can be extremely complex. If we consider the newly
finished Wembley stadium in London, UK, the catering logistics
required are phenomenal. The stadium has a capacity of 90,000.
With 60 bars and 41 food and beverage outlets the stadium hos-
pitality facilities include conference rooms of up to 1,000 capacity
and reception rooms for up to 3,000 capacity. With 803 points of
sale and a total of 3,000 hospitality employees, Wembley is one
of the biggest catering sites in Europe. It includes a 950 cover
Atrium restaurant, serving buffet food, the great hall and ban-
quet space for up to 1,500 people, as well as four signature res-
taurants of 650 covers each, including two à la carte eateries and
two brasseries. It also features two Champagne and seafood bars
as well as two large free-flow public catering areas, 162 private
boxes, two super boxes and a royal suite for up to 400 people
Kühn (2007). This example illustrates the fact that stadia incor-
porate types of food and beverage outlets from every sector
described in Chapter 2, making it an extremely complex opera-
tion that would require careful planning and organization to
ensure success.

Marketing • • •

Many of the venues will try to entice the consumer earlier than
the starting time of the event to maximize sales. Often leaflets
might be handed at to the public featuring ‘early bird’ offers as
well as the type of food and drinks on offer at the venue. Meal
deals often seen in fast-food operations are also a popular pro-
motional tool to increase multiple item purchasing. For example,
a consumer may be offered to buy a pint of specific lager and a
pie and gets a bag of crisps for free. The major contract caterers
such as Delaware North, Compass and Sodexho use the Internet
extensively as a marketing and promotional tool.

Product and service styles • • •

Soft and hot drinks and sandwich markets appear to be the most
popular items according to Mintel. However, it is not uncommon
for exclusive restaurants to be featured in many of the worlds
stadia. Therefore the service and product style often seen would
incorporate all the production styles and service styles of the
sectors illustrated in Chapter 2 of this book. However, it is worth
mentioning something specific to stadia in terms of service
styles; often catering staff may be seen moving around the sta-
dium selling food and beverages whilst a game is taking place.
They can be on foot carrying trays or in some cases in specially
converted bicycles that allow the sale of cold bottled beverages
or even warm food.

Staffing • • •

Staffing can be a major ‘headache’ for the human resources man-
agement of such an operation. Because of the fluctuation of the
events that could range from the corporate entertainment of a

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Contract, travel and public sector catering

handful of people to that of a few thousands the organizations
involved tend to have a core of permanent staff whilst they
manage an often enormous database of casual staff that can be
called upon to cover a certain event. Two major problems eman-
ate from such a setup. The first is that of consistency, so organ-
izations will have to ensure that all staff are trained to ensure
standards of production and service are maintained at all times.
The second is ensuring that the casual staff in the database get
enough work every week to keep them interested in coming
back for more work in the future.

Technology • • •

Two key considerations in such environments are paramount:
health and safety, and speed of service. Advancements in tech-
nology enable operators to have better control of their food pro-
duction ensuring health and safety standards are maintained
throughout the production and service delivery. With large stadia
that often have an excess of 500 selling points, EPOS systems and
networking technology has to be extremely robust. Technology
can also ensure that food production and food holding can be
achieved with larger numbers than ever before. The new Wembley
stadium in the UK features a beer dispensing system that has the
pumping capability of four pints per sixteen seconds with the sta-
dium number of sales points that means at optimum production
their 803 points of sale can produce 45,169 pints in fifteen min-
utes. That is half the total possible capacity of the stadium and in
theory it would mean the end of customer queuing for a pint.

Leisure venue catering

Leisure venue catering is catering offered in venues such as
museums, theatres, cinemas, historic buildings, zoos, wildlife
parks, art galleries. Perhaps, because of the captive nature of the
market the key management issues that appear to be prevalent
are that of pricing and quality. In the UK, the market has exceeded
the £2 billion mark since 2006. However, the growth of the sector
compared to that of free-standing restaurants is quite slow sug-
gesting that improvements could be made (Figure 3.3). Although
the majority or leisure venues outsource their catering a signifi-
cant number chooses to keep their catering in house. This is more
prevalent in cinema and theatre catering.

Financial implications • • •

Although catering in museums has shown the largest growth in
the leisure venue catering in recent years Museums and art gal-
leries in the UK have lost a major competitive advantage. With
the introduction of free admission consumers have the option to
go to a high street restaurant and re-enter the museum or gal-
lery later. What was once a captive market has now become
at best a semi-captive one. This meant that catering in such
establishments has to offer a better value for money than it has

85 • •

Food and Beverage Management

8,000
6,000
4,000
2,000

0
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011

Figure 3.3 Trends in the UK Leisure Venue Catering market, 2001–2011 (in million pounds)
(Source: Mintel Reports, March 2007)

done in the past, ensuring that costs remain low whilst qual-
ity of product and price remains competitive enough to entice
visitors to buy from their outlets. In order to ensure higher profit
margins whilst remaining competitive leisure caterers will have
to ensure that they maximize their sales per available customer
within the venue. That means that vendors must ensure that the
long queues that often put off consumers must be minimized.

Marketing • • •

Apart from the common promotional techniques used such as
meal deals and discounted offers, catering in leisure venues over
the past years had a reputation of bad value for money. Caterers
today must not only ensure that customers are enticed to buy
their in-house products but also that they develop a brand that
communicates quality and efficiency to the consumer. This one
of the main reasons leisure venue operators will often chose to
outsource their food and beverage provision to well-established
contract catering companies. The main operators in the UK are
Compass, Sodexho and Elior although there are other operators
such as DO & CO, Searcy and Caterleisure (Figure 3.4).

Product and service styles • • •

The majority of visitors purchase snacks or take-away food such
as burgers, hot dogs, crisps and chocolate. Therefore the majority
of the food provision can take often the form of retail. Counter,
buffet and take-away service styles tend to be amongst the more
popular for leisure catering (Table 3.3).

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Contract, travel and public sector catering

Figure 3.4 DO & CO at the British Museum (Source: http://www.doco.com)

All events no matter the location share one trait:

meticulous attention to detail and as a consequence

training by our in-house academies is essential. The

British Museum, or any other historic building is one

of the most challenging environments a caterer can

operate within. One minute it can be empty, then

it rains, and within one hour it can be full, which is

very difficult to plan for. Alternatively, the museum

may provide us with a one-hour window to set up

an event for over 1,000 people with hot food and

drinks in one of the galleries.

The museum has procedures and protocols for

almost everything. Ranging from the serious, such Christian Bayer, Project Manager and Chris
as the evacuation procedures, which results in Marsland, Food and Beverage Manager of DO &
many customers walking off and leaving their food CO at the British Museum explain the chal-
and bills. To the not so serious, such as the proced- lenges of events and running a catering oper-

ure for removing a pigeon perched on the planters ation at a museum.

in the restaurant, giving the customers cause for

concern.

Catering by its very nature needs to be flexible and elastic; however the museums are institu-

tion governed by their own regulations that can often be inflexible. In order to effectively run a

multi-unit catering operation within such a unique space, it is important to understand the limits

of what you can change and what you cannot (i.e. playing the system). And, of course, knowing

the right people means everything!

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Food and Beverage Management

Percentage of a
sample of
809 visitors

Cold snacks (e.g. crisps, chocolate, 47
nuts)
45
Hot take-away food (e.g. hotdog,
burger, hot pie/pastry 45

Cold take-away food (e.g. 30
sandwiches, ice cream) 27

Hot snacks (e.g. chips, nachos) 19
Hot sit-down meal (e.g. pizza/
19
pasta, shepherds pie, curry)
Cold sit-down meal (e.g. salad, 1
15
sandwiches)
Healthy snacks (e.g. fruit, energy/

cereal bars)
Others
Did not buy food

Table 3.3 Source: Mintel Reports (March 2007)
Types of food bought at leisure
venues, 2007 In recent years, the minimum wage in the UK has been increased
much faster than inflation rates. This has caused an added chal-
Staffing • • • lenge to operators and for a sector that was traditionally perceived
as an expensive one compared to high street vendors transferring
Technology • • • the added cost to the consumer farther expanded the gap between
consumer expectations and value for money delivered. When
catering is kept in house, operators have a separate staff division
that focuses on hospitality. Casual staff are also used as there is a
fluctuation of visitors depending on day of the week, weather and
time of the year. During weekends and school breaks, for example,
leisure parks tend to be at their busiest. This in turn does affect
the quality of service especially with the larger operators.

One of the key allies in recovering product and service quality
lies in the investment of information technology. The latest EPOS
technology can help managers keep track of customer prefer-
ences as well as employee productivity, this can be a great tool in
allowing the manager to identify a member of staff that may be
in need of further training or even award that excellent member
of staff that could otherwise go unnoticed.

TRAVEL CATERING

Travel catering (i.e. road, rail, air and sea) has a number of char-
acteristics not commonly associated with other food and bever-
age outlets. It frequently involves the feeding of a large number

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Contract, travel and public sector catering

of customers arriving together at a catering facility, and who
need to be catered for in a specific time, for example, on board a
plane. The plane only carries sufficient food and beverage sup-
plies for a specific number of meal periods. If for any reason this
food cannot be served to customers, alternative supplies may not
be readily available. The service of the food and beverages may
be particularly difficult due to the physical conditions within the
service area, for example, turbulence on board a plane. The types
of restaurants described previously are usually catering for a
specific and identifiable socio-economic market. Travel catering
often has to cater for ‘mixed markets’. Finally, there are the prob-
lems of staffing these food and beverage facilities: the extra costs
involved in the transportation and service of the food and bev-
erages; space restrictions and the problem of security while the
operation is in transit. Four main types of travel catering may be
identified: Airline catering, Cruise ship and Ferry boat catering,
Train catering and Motorway catering.

Airlines

The major new trend of the past ten years in the Airline industry
in Europe has been the introduction and substantial growth of
the budget or ‘no frills’ airline phenomenon. Companies such as
Easyjet and Rynair have shown amazing growth. The total air-
line growth from the year 2000 to 2006 has been an amazing 30%
(Figure 3.5) but mainly due to the increase in budget airlines the
in-flight catering expenditure had a downward trend in recent
years (see Table 3.4).

Airline catering has increased and developed considerably over
the past twenty-five years. Originally consisting of sandwiches and
flasks of tea, coffee and alcoholic beverages, the progress to today’s
full and varied service has paralleled that of aircraft development
itself. In budget airlines, however, the product has gone back to
the basic trolley with sandwiches, snacks chocolate and limited
selection of beverages on offer. Airline catering falls into two main
areas: terminal catering, and ‘in-transit’ or ‘in-flight’ catering.

Financial implications • • •

The cost of a hot meal and beverage to the airline is about £6.50
but the biggest cost to the airline is the waiting to restock the

Figure 3.5 240
UK Airline passengers, 230 Airline passengers
2000–2008 (Source: 220 in millions
Adapted from CAA) 210
200
190
180
170

2000 2001 2002 2003 2004 2005 2006

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Food and Beverage Management

2002 2005 2007 % change
£m % £m % £m % 2002–2007

In-flight 613 72 590 72 577 72 Ϫ6.0
Ferry 170 20 155 19 152 19 Ϫ10.6
Rail 69 8 75 9 73 9
ϩ4.2
Total 852 100 820 100 802 100
Ϫ5.9

Table 3.4 Source: Mintel Reports (May 2007)
UK onboard catering market,
by sector aircraft and time at an airport can mean a big loss of income to the
carrier. If, for example, a carrier flies from London, UK to Athens,
Marketing • • • Greece, it may cost the airline less to stock up for the return
trip (Athens–London) as well, limiting the waiting time at the
Greek airport. This is especially true for budget airlines as they
are well known for their strategy of limiting their turnaround
time (see Table 3.5).

Airlines have tried to different experiments to alleviate the
widely held customer perception that airline food is bland. Some
airlines have tried introducing high street brands in their food
packaging. Quite often the quality of the food is used in their
marketing campaigns as a unique selling point, and airlines will
employ a well-known chef to design their menu as part of their
marketing efforts (see product and service styles). An interest-
ing resource worth mentioning is http://www.airlinemeals.net/.
This website invites members of the public to upload pictures of
their in-flight food.

Activity 2

Thinking of the last airline you travelled with, see if you can find
some pictures of their in-flight menu on the Internet.

What are your views of the in-flight catering service and food
quality in general?

Can you recall any differences between different airline food?

Product and service styles • • •

The in-flight catering service varies considerably with the class
of travel, type and duration of flight. For the economy travellers,
the food and beverage portions are highly standardized with the
meals portioned into plastic trays that are presented to the pas-
sengers and from which they eat their meals. Disposable cutlery,
napkins, etc. may be used to increase the standard of hygiene and
reduce the weight carried and storage space required. Gourmet

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Contract, travel and public sector catering

Airline Aircraft Number Flight Number of Available Seat (km)
hours passengers seat (km in used (؉%)
km (in of flights
thousands)
thousands)

Air Atlantique 948 3,305 3,250 21,431 47,918 50.8
Air Southwest 3,209 13,790 12,359 328,084 160,644 61.8
Astraeus 21,629 29,524 809,968 3,720,734 76.9
Aurigny Air 2,688 9,581 10,153 419,552 132,816 67.6
20,182
Services 55,483 58.9
BA Connect 20,268 91,862 130,780 3,302,742 3,480,415 53.6
BMED 94,487 6,271 25,185 376,434 2,813,929 69.1
BMI Group 614,195 13,811,843 76.7
British Airways 125,477 201,039 9,942,528 146,729,551 74.5
British 396 266,081 921,161 32,724,392
9,877 45.9
International 13,691 6,296 2,155 117,256 81.5
Eastern Airways 228,702 82.1
EasyJet 34,370 33,668 500,071 469,063
European Air 2,500 226,185 409,521 27,970,593 33,885,755 90.7

Charter 78,515 1,681 3,944 161,941 324,071 48
First Choice 63.3
2,762 29,493 113,194 5,517,283 17,737,530 82.5
Airways 41,228 80.4
Flightline 25,135 7,212 7,029 175,525 281,024 57.9
Flybe 42,337 86,044 79,541 4,536,841 3,987,743
Flyglobespan 11,625 37,720 1,489,377 4,205,776 77.2
GB Airways 697 21,753 65,653 2,741,717 6,915,735 56.1
Isles of Scilly 31.1
32,233 6,736 3,128 53,638 10,923
Skybus 6,361 82
Jet2.com 438 26,808 56,244 2,831,922 5,166,385 91.2
Loganair 31,399 24,814 496,537 197,148
Metropix UK 71,630 776 6,132 61.4
Monarch Airlines 54,625 169 560 87.2
My Travel 32,256 105,672 5,788,234 18,016,794
4,630 18,573 3,568,277 13,421,516 86.9
Airways, UK 66,563 78,020 70.3
Scot Airways 29.8
Thomas Cook 117,917 8,720 10,468 164,731 143,511 72.8
3,481 23,609
Airlines 293 93,525 4,872,999 16,446,072 84.3
Thomsonfly
Titan Airways 139,528 54,063 175,953 9,617,416 27,632,857 86
Triair (Bermuda) 2,867 4,554 64,677 518,496
Virgin Atlantic 1,403 129 371 659 4,140

Airways 16,283 18,960 177,897 4,887,541 48,308,314
Silverjet
446 1,996 90,756 324,403
(October–
December) 5,573 23,373 1,044,726 4,067,039
Xl Airways, UK
(September–
December)

Source: CAA http://www.caa.co.uk/

Table 3.5
UK airline statistics, 2006

91 • •

Food and Beverage Management

Staffing • • • food in the airlines is another recent trend. To ensure a “Gourmet
Brand” in their menu, Airlines are hiring celebrity chefs such as
Technology • • • Guy Martin, of Paris’ three star Le Grand Vefour Hotel, work-
• • 92 ing for Air France; Govind Armstrong of Table 3.8 in Miami and
Los Angeles, working with Air New Zealand and Christian Petz,
of Vienna’s Restaurant Palais Coburg, working for Austrian
Airlines. Stephan Pyles, of the Dallas restaurant, working with
American Airlines whilst Charlie Trotter, the Chicago chef, intro-
duces dishes created for premier United Airlines passengers.
The lower than normal air pressure can affect customer percep-
tion of taste as well as digestion and executive chefs designing a
menu will often taste it mid-air to ensure they have compensated
for this. Added to that is the fact food is not cooked on board,
it is just warmed. Meals are prepared twelve to sixteen hours in
advance chilled and then held at low temperatures.

Service is from a gueridon trolley, where food is portioned in
front of the customers and any garnishes, sauces, etc. are added
according to their immediate requirements. The crockery used may
be bone china and this combines with fine glassware and cutlery to
create an atmosphere of high-class dining. Some airlines offer full
silver service menu for their first class and business travellers.

A characteristic of airline catering is that this service is often
contracted out to a specialist catering firm, which will supply a
similar service to many airlines. The meal is usually included in
the price of the fare with the exception of budget airlines. The
growth in air travel has made competition fierce, and the area of
food service is now a particularly competitive aspect of the total
service offered by an airline. An interesting concept currently in
the USA is that of gourmet meals delivered to the airport by the
SkyMeals company (see http://skymeals.com/).

Food and beverage outlets at air terminals usually consist of self-
service and waiter service restaurants, supplemented by vending
machines and licensed bars. The major restaurant brands often
seen in high streets can also be seen in airport terminals.

In flight catering service is delivered by the flight attend-
ants, who often see the service of food and drinks as secondary
to their responsibility of ensuring the health and safety of pas-
sengers, this can be especially true if customers are flying in
the economy class. Although health and safety should always
remain flight attendants primary responsibility airlines that wish
to claim a competitive advantage ought to train and offer incen-
tives to individuals that offer exceptional service.

The main issues with aircraft are that of space and weight.
Ensuring that on-board ovens are lighter, take less space and
consume less energy are of primary importance. Advancements
in technology may mean that airlines may be able to offer a
menu fully cooked on board one day.

Contract, travel and public sector catering

Cruise ships/Ferry boats

The cruise ship sector is one of the fastest moving sectors in the
hospitality industry. The number of passengers has grown to
more than 12 million in 2006 from approximately 500,000 in 1970.
Forecasts suggest that by 2012 the global industry will reach
20 million passengers with the USA and UK leading in terms
of cruise ship passengers (Table 3.6). Budget or ‘no frills’ cruise
liners are making an appearance with new companies such as
Caspi Cruises, Easy Cruise, whilst older budget companies such
as Thomson or Louis Cruise Line increase their fleet capacity.

On the other hand, Ferry boat catering has slumped as the
numbers of Ferry travellers has dramatically decreased due to
the increase of low-cost airlines. In UK, the onboard catering
market was valued at £155 million for 2005, a 19% decrease since
2000, and the trend is still going today (Mintel Reports, May
2007).

Financial implications • • •

Whilst cruise ship catering promises growth Ferry boat catering
is extremely competitive. Mintel is forecasting a downward trend
continuing well into 2010. Traditional cruise liners are looking to
be more innovative continuing with all inclusive packages but
offering optional extras. Wedding and honeymoon packages are
another two products often offered by cruise liners.

Marketing • • •

Cruise liners are expanding their marketing strategies to tar-
get non-traditional market segments. Increasing competition
in the budget sector forces them to think innovatively in find-
ing ways to sell their product without conflicting the more trad-
itional brands. Special promotions, discounts during low season,

2001 2002 2003 2004

North America 6,906,000 7,470,000 8,195,000 9,107,000
UK 776,000 824,000 963,000 1,029.00
Continental Europe
Asia (excluding Japan) 1,130,000 1,296,000 1,709,000 1,758,000
Japan 600,000 600,000 500,000 450,000
Australia 200,000 220,000 200,000 200,000
Latin America 75,000 116,000 154,000 158,000
Others 315,000 312,000 320,000 340,000
190,000 360,000 300,000 315,000
Total
10,192,000 11,198,000 12,340,000 13,377,000
% change 8.40%
1.20% 9.90% 10.20%
93 • •
Source: Mintel Reports (September 2005)

Table 3.6
Ocean cruise passengers worldwide, 2001–2004

Food and Beverage Management

special occasions, anniversary gifts to customers are some of the
promotional tools used by most liners.

Product and service styles • • •

Sea or marine catering varies from the provision of food and bev-
erages on the short sea route ferries to the large cruise or passen-
ger liners where the catering facilities are an important part of
the service offered by the shipping line and are usually included
in the price of the fare. On the cruise liners the standard of cater-
ing facilities is high because they are an important sales feature
in a competitive activity. On the short sea routes, however, price
is usually a more important factor and because of the necessity
to feed large numbers of people in a short time the catering ser-
vice provided is usually of the popular and fast-food type. In the
cruise liners companies appear to be more innovative than ever
with companies such as Princess Cruises serving dinner in cus-
tomer cabins or suite balconies ensuring extra food and bever-
age income. The Gourmet ‘bug’ is also appearing in the cruise
sector with celebrity chefs such as Todd English on Queen Mary
2; Nobu Matsuhisa and Wolfgang Puck on Crystal; Marco Pierre
White on the new P&O Ventura (Figures 3.6 and 3.7) and Gary
Rhodes on two P&O’s ships, Oriana and Arcadia. Service styles
can range depending on cruise liner from full silver service to
self-service and buffet. With Ferry boats the service style often is
cafeteria or take away due to the short journeys involved.

Staffing • • •

After casino sales one of the largest revenue generators in cruise
liners is beverage sales. Staff are trained extensively in up-selling

Figure 3.6
Cruise ship dining. Photo
courtesy of P&O (Source:
http://www.pocruises.com)

• • 94

Contract, travel and public sector catering

Figure 3.7 The new Ventura super liner by P&O Launching April 2008, this cruise liner is 115,000 tons with a capacity of
3,600 passengers, 1,200 crew, 1,546 cabins (880 balcony cabins), 11 restaurants, 12 bars, 5 places to shop, 3 places to
dance, 5 places for live music, 2-tier theatre, 2 show lounges, a nightclub, 5 pools and 6 Jacuzzis (Source: http://www.
virtualventura.co.uk)

techniques and with traditional cruise liners the recruitment
process ensures that some of the best staff are hired. With the
added incentive of tax-free incomes many hospitality profes-
sionals consider a few months on a cruise liner. The organization
on cruise ships can be extremely hierarchical. Most front line
employees tend to stay for only a few trips as the nature of the
ship means that there is not much to do but work whilst on a
cruise ship.

Technology • • •

Advanced EPOS technology and bar dispensing equipment
mean better control of sales, stock control and wastage ensur-
ing better profit margins as well as the facilitation of special
discounts. Advancement in waste disposal technology ensures
waste is better compacted shredded and incinerated.

Trains

According to Mintel Reports (December 2006), unlike Ferry and
in flight catering, rail catering is showing an upward trend in rev-
enues generated. Rail catering may be conveniently divided into
two areas: terminal catering and in-transit catering. There are 2,500
rail stations across the UK. The main rival to rail is the low-cost
airlines but the introduction of Eurostar in 2003 raised the rail mar-
ket share in the UK. The improvements of the West Coast Mainline
and the introduction of the Pendolinos train by Virgin Trains pas-
senger numbers increased by a 20%. In the US sales reached $79
million in 2005 (Figure 3.8 and Table 3.7).

Financial implications • • •

With a 4.2% increase in rail catering revenue the sector appears
a positive one. The main products purchased are hot beverages
and snacks so the focus is in the reduction of costs to ensure

95 • •

Food and Beverage Management

Percentage change 10.0 Ϫ3.1 9.1 2000–2003
8.0 4.2 2003–2005
Figure 3.8 6.0 Ϫ6.0
UK percentage change in value 4.0 Plane Train Ϫ4.1
of the UK onboard catering 2.0 Ϫ6.1
market, by sector (Source: 0.0
Mintel Reports, May 2007) Ferry
Ϫ2.0
Ϫ4.0
Ϫ6.0
Ϫ8.0

F&B sales $78,929,599
Food $30,237,417
On train food condemnage $222,920
Liquor and tobacco $3,395,625
Total cost of goods sold $33,855,963
Gross profit $45,073,636
% Gross profit 57%

Table 3.7 Note: F&B – Food and beverage
US rail F&B gross profit, 2005 Source: http://www.narprail.org

higher profit margins. Spend per passenger increases as the
length of journey increases, however some companies offer all
inclusive ticket prices which help raise the food and beverage
revenue generated.

Marketing • • •

The provision of food and beverage in rails is often used as pro-
motional tool. Ticket inclusive packages are often advertised in
an effort to entice customers away from low-cost airlines. The
sector is not as aggressive as it could be with its promotional
efforts on food and beverage sales. The majority of train com-
panies advertise their services in their in-house magazine whilst
some have an e-marketing campaign and also use local and
international media advertising.

Product and service styles • • •

Catering at railway terminals usually comprises licensed bars,
self-service and waiter service restaurants, fast food and take-
away units, supplemented by vending machines dispensing hot
and cold foods and beverages. In-transit catering can feature

• • 96

Contract, travel and public sector catering

three kinds of service. The first is the traditional restaurant car
service where breakfast, lunch and dinner are organized in sit-
tings and passengers go to the restaurant car for service where
appropriate seating accommodation is provided, and then return
to their seats on the train after their meal. In a Pullman service,
these meals are delivered direct to the seat of first-class passen-
gers only. The second type of service is the buffet car, which is
a self-service operation in which passengers go to the car and
buy light refreshments over the counter. The third is a trolley ser-
vice where snacks and drinks are delivered to customers at their
seats. Innovative approaches to catering on trains are also in evi-
dence such as the operation of ‘Cuisine 2000’ using cook-chilled
foods prepared centrally, buffet cars turned into bistros on the
London to Birmingham route, and on the east coast Anglo-
Scottish route ‘A taste of Scotland’ restaurant service.

Staffing • • •

In the UK, the Network rail is undertaking a project that looks
to rejuvenate the provision of skills in the rail catering and other
rail staff. In partnership with local colleges the programme aims
to bring all staff to a National Vocational Qualification standard.
For example, in 2004 the country’s first Rail Academy – run by
York College in partnership with the National Railway Museum
the academy was funded with £1.25 million. Other similar ini-
tiatives have been introduced all over the UK ensuring that rail
employees are well trained.

Technology • • •

There have been a number of advancements in railway kitchen
design and technology enabling operators to serve more compli-
cated menus than ever before. Also the same benefits enjoyed by
the other sectors with the advancement of EPOS and beverage
dispensing technologies are also enjoyed by the rail sector.

Roads/motor side

Road catering has progressed from the inns and taverns of earl-
ier days used by those travelling on foot and horseback to the
present-day motorway service areas (MSAs) and other roadside
catering outlets. High street fast-food operations are also now
appearing both on MSAs and as free-standing drive-through.
As an example, in the UK, there are 86 MSAs. Moto is the big-
gest MSA operator with 42 sites followed by Welcome Break and
Roadchef. These three operators control 89% of the market whilst
McDonalds are slowly emerging as a significant MSA operator.

Financial implications • • •

The numbers of cars on the road are on the increase. In UK
from 1999 to 2004 there was an increase of almost 3 million cars
(Figure 3.9). There is a constant decrease of households without
cars whilst the percentage of females holding driving licences

97 • •

Food and Beverage Management

Figure 3.9 31 27.96 28.6 29.32 29.9 30.41
UK cars, 1999–2004 (Source: m 2000 2001 2002 2003 2004
Mintel Reports, September
2004) 30

29

28 27.54
27

26
1999

Motorcycles Air
1% 1%
Cycles

Rail 1%
6%

Buses and
coaches
6%

Cars, vans and
taxis 85%

Figure 3.10
UK transport by mode 1999–
2003 (Source: Mintel, 2004)

has risen from 49% in 1989/1991 to 61% in 2002/2003. This does
have implications as demographics change so do trends in con-
sumer expenditure. As seen in Figure 3.10 public transport in the
UK only accounts for 12% of traffic, this would suggest a steady
growth of motorway catering revenue well into 2010.

Marketing • • •

MSAs main marketing tool are the road signs. The main motive
for consumers stopping at such a facility is that of convenience.
Advertising is heavily regulated and often operators may not be
allowed to use their own brand in motorway signage.

Product and service styles • • •

MSAs provide a valuable catering service to the travelling public
and their food and beverage facilities usually include self-service
and waiter service restaurants, vending machines, and take-away
foods and beverages.

• • 98

Staffing • • • Contract, travel and public sector catering
Technology • • •
Vending machines These service areas are often open twenty-four hours a day and
have a particular problem of staffing as some employees have
to be brought to and from work over a distance of 20–30 miles.
Also, because of their isolated locations, the hours they are open
and the sheer volume of numbers involved at peak periods,
these service areas are also particularly prone to vandalism and
littering.

In the USA, public wireless Local Area Network (LAN) is widely
available. In the UK, talks for public wireless LAN in MSA’s first
started in 2003 with the first hotspots installations around 2004.
This added service may have an effect on the average food and
beverage expenditure of customers in MSAs. The longer a busi-
ness person spends online whilst at an MSA the more likely they
will need to purchase food or drinks.

Vending today has become synonymous with selling from a
machine. It is also known as ‘automatic retailing’ or selling from
an ‘electronic cafeteria’ and involves a machine providing the
customer with a product in exchange for some form of payment,
coins, credit cards, etc. Although vending was in evidence in the
UK prior to the Second World War, mainly in the form of choc-
olate and cigarette machines, it was not until the 1950s that the
vending of drinks and snack items really became established in
this country. The markets for vended products have grown stead-
ily over the last forty years. In beverage vending, canned drinks,
cartons and bottles have shown the greatest increase in growth
whilst snack foods have increased the greatest (Table 3.8).

According to Mintel, the value of the vending market grew by
15% between 1999 and 2004 to reach £2.2 billion. However, the
market has actually declined by 3% in real terms, although their
forecasts show a steady growth both in revenue and numbers of
vending machines showing a 5% steady increase. The number of
machines increased by 13% over the same period, indicating that
the growth in the market can be attributed mainly to the expan-
sion in the number of machines, rather than a rise in the unit
value of products.

Factors to consider when outsourcing vending operations to a
contractor:

1. No capital outlay for machine – it is supplied by contractor.
2. Some installation costs paid by client, for example water and

electricity.
3. Operating costs such as ingredients, commodities, cups, main-

tenance, cleaning and servicing done by contractor.
4. Selling prices set between client and contractor. Reimbursement

costs, direct and indirect to contractor.

99 • •

Food and Beverage Management

Drinks Confectionery/snacks/meals Total
£m £m Index £m Index

Index

2004 815 100 640 100 1,455 100
2005 877 108 682 107 1,559 107
2006 917 113 726 113 1,643 113
2007 974 120 767 120 1,741 120
2008 1,007 124 798 125 1,805 124
2009 1,045 128 826 129 1,871 129

At 2004 prices

Drinks Confectionery/snacks/meals Total
£m

Index £m Index £m Index

2004 815 100 640 100 1,655 100
2005 854 105 664 104 1,727 104
2006 871 107 689 108 1,775 107
2007 898 110 707 111 1,826 110
2008 898 110 711 111 1,830 111
2009 908 111 718 112 1,849 112

Source: Adapted from Mintel Reports (December 2006)

Table 3.8
Forecast of expenditure on vended products, by sector

The range of vending machine equipment or hardware is
divisible into two major groups:

1. Beverage venders: Beverage vending machines have accounted
for the largest share of vending sales over the last thirty years
and consequently their design has been developed further
than the food vending machines. This group is discussed in
greater depth later in this chapter.

2. Food vending machines or merchandisers: Food vending machines
may vend a variety of food products – confectionery, snacks,
plated meals, etc. and are usually vended in one of three types
of machine:
(a) Snack machines: Confectionery, crisps, biscuits, etc. are
usually vended from an ambient temperature machine
as these items have a relatively long shelf life and do
not have any special temperature requirements. Because
of these factors, servicing of the machines except for
re-stocking purposes, can be kept to a minimum thereby
also reducing operating costs.
(b) Refrigerated machines: Snack items such as sandwiches and
rolls have a limited shelf life and need to be date-stamped
(‘sell-by’ or ‘use by’) and vended through a refrigerated
machine. Plated foods such as salads, cold meats, etc. must
be vended from refrigerated machines where the holding

• • 100

Contract, travel and public sector catering

temperature is between 2°C and 5°C. At this temperature
the food may be kept for 2–4 days, although some oper-
ations work on a twenty-four hour cycle only.
(c) Hot meal machines: Food for a hot vending service may
be vended in a number of ways. The first is the heated
food vendor which will hold the temperature of the
plated food at about 69°C for up to six hours. The second
is the hot can vendor which usually offers a choice of
items. The selection of hot canned meals, for example
soups, baked beans, pasta dishes, casseroles, etc. are held
at a temperature of 68°C in the machine without deteri-
oration in the quality of the food. Money is placed into
the appropriate slot and the hot can is vended together
with a disposable bowl and suitable cutlery to eat the food
with; the can is easily opened by the use of a ring pull top.
The third involves the use of a microwave oven adjacent
to a refrigerated merchandiser. Cooked food is plated by
kitchen staff, rapidly cooled and placed into a refrigerated
merchandiser; if limited kitchen facilities are available,
ready plated or semi-prepared foods may be bought in
from a supplier, plated and put in the vending machine.
The food is heated when placed in the microwave, which
has an automatic timing device for the different foods
which begins when a token or code is put into the micro-
wave. The time taken for a meal to be heated thoroughly
depends on whether it is a snack item or a full meal. Snack
items being heated from a refrigerated state takes between
ten and thirty seconds, and a main meal between forty and
sixty seconds, depending on the quantity and depth of the
food, and the power supply feeding the microwave. The
range of products available for hot meal vending is now
quite considerable although snacks and sandwiches still
account for the largest percentage.

Within each of these groups the type of vending machine used
will depend largely on the type of product being vended. For
confectionery and pre-packed goods a simple mechanical unit
with a drawer at the base of the column is all that is required;
it can be free-standing, wall-mounted or be positioned on a
fixed surface and does not require any electricity or water sup-
ply. Snack and sandwich vending machines require a power
supply only and because their products are easily consumed,
the machines can be situated outside wards, in the corridors
of hotels, etc. close to the customer market. Machines vend-
ing plated meals need to be situated close to the kitchen facil-
ities and adjacent to the dining area; some banks of vending
machines are sited such that the kitchen is behind the machines
for ease of stocking and the dining area is in front of them. These
types of machines may be a rotating drum or revolving shelf
design whereby a button is pushed rotating or revolving shelves
until the required item is reached and then removed through a
flap door.

101 • •

Food and Beverage Management

The basic question of whether to use vending machines or not
should be taken after careful consideration of the organization’s
catering and financial policies and an assessment of what vend-
ing has to offer. The main advantages associated with vending
include the following:

1. Flexibility: Vending can provide a twenty-four hour food and
beverage service, either alone or in conjunction with other
catering services. Customers can use a vending machine when
they want to, rather than only when a cafeteria is open.

2. Situation: Vending machines can be sited close to the customer
market, for example in office corridors, thus reducing work-
ers’ time away from the workplace queuing for a snack or
drink; customers are also more likely to take a vended drink
back to their workplace and consume it there, rather than
spend time away from their work, for example in a cafeteria.
Satellite vending machines can also be used to serve areas
that would not normally benefit from a catering facility; for
example, in a large industrial complex, machines can be sited
some distance from the main kitchen and dining area.

3. Quality control: In terms of quality, vending machines can
sell a consistent product, particularly beverages, pre-packed
snacks and bought in meals from a supplier. Meals prepared
in the kitchen can also be plated under tighter quality and
portion control.

4. Hygiene control: Reduced handling of vended foods also
reduces the possibilities of food contamination. Many bever-
age machines now also have built-in, self-clean mechanisms.

5. Operating control: Labour savings can be made as once cleaned
and stocked vending machines should require the minimum
of maintenance, thus reducing labour costs. Wastage, pilfer-
age and cash losses should also be negligible.

6. Speed: Vending machines can ‘sell’ products quickly and
efficiently, for example a hot chips machine which can vend
portions of freshly prepared chips, always giving a standard
product, at a standard price.

7. Sales promotion: Products for sale in a vending machine can
look attractive and stimulate ‘impulse purchases’, particularly
glass-fronted merchandisers (GFMs) displaying fresh fruits,
sweets, etc.

The disadvantages associated with using vending include the
following:

1. Impersonality: Vending machines lack the ‘personal touch’
and some customers will always prefer to be served food
and beverages in the traditional manner rather than from a
machine.

2. Inflexibility of the product: Initially the range of products avail-
able for vending was quite limited; today, however, vending
machines offer a much wider selection, and beverages in par-
ticular can be highly customized.

• • 102

Contract, travel and public sector catering

3. Reliability: One of the major causes of dissatisfaction with
vending machines in the past has been that the coin mech-
anism could become jammed and the machine would give no
service. This in turn left the machines open to abuse and van-
dalism. Since their introduction the vending machines’ coin
mechanism has been a mechanical device which could be regu-
larly jammed with foreign coins, washers, etc. Today, how-
ever, the electronic coin mechanism can detect even the most
accurately produced fake coins, which even when fed into the
machine, do not jam it. Electronic mechanisms are constantly
being improved and are incorporated into the majority of new
machines. These electronic mechanisms are also capable of
accepting different valued coins, displaying a running total as
they are added and of giving change.

4. Limiting: For large-scale food and beverage service, vending
machines have limitations. In some situations they are best
suited as a backup to the main catering services although a
bank of vending alleviates queuing and waiting time. They
are also of less use in up-market situations, except in the form
of mini-bars, for example in hotels.

Financial implications • • •

The vending market is a retail-based operation and profits rely
on high volume turnover, however the sector is highly competi-
tive and pricing wars by different vendors may eat into profits.

According to Mintel Reports (2005) in the UK the vending
market grew by 15% between 1999 and 2004, the market has
actually declined by 3% in real terms, as the slump in the cig-
arette segment and inflationary pressures slowed year-on-year
growth. The number of machines increased by 13% over the
same period, indicating that the growth in the market can be
attributed mainly to the expansion in the number of machines,
rather than a rise in the unit value of products (Table 3.9).
However, in the USA it is expected that sales of the vending
industry will fall from $14 billion to $12.5 billion by 2010.

Machines Index
(in thousand units)*

2004 770 100
2005 785 102
2006 805 104
2007 820 106
2008 842 109
2009 866 112

Table 3.9 Source: Mintel Reports (March 2005)
Forecast of the number *Number of machines in circulation
of vending machines,
2004–2009

103 • •

Food and Beverage Management

Marketing • • •

The markets available for vended products are varied and
numerous and may be grouped into three main areas:

1. The general market vending machines and their products
may be situated in areas to which the general public largely
has access; for example, shopping courts, MSAs, garage
forecourts, airports, seaports, ferries, rail and bus terminals,
libraries, swimming and leisure centres, stadiums, exhibition
centres, cinemas and theatres.

2. The industrial market includes those establishments where
vending machines are provided for employers and employ-
ees in office blocks and shops, factories and sites, etc. Eighty
per cent of companies in the UK having installed vending
machines at some or all of their premises.

3. The institutional market includes establishments such as hos-
pitals and schools, prisons, sports complexes, universities and
colleges and more recently hotels, replacing to some extent
floor service.

Product and service styles • • •

Vending operates in a very competitive market and a number of
developments and market trends may be identified in the vend-
ing sector:

1. Cashless systems: The development of card operated vending
has probably been the most important technological develop-
ment in vending. The leading supplier of this type of system
is Girovend, the main component being a credit card type of
pass or card which can record the user’s own data; it can be
used for personnel control such as security, identity passes,
attendance recording, leisure facilities, etc. For catering pur-
poses, customers can buy any food and beverage items from
a vending machine by placing their card into the machine
instead of cash; their card is then debited with the amount for
the items purchased.
(a) The card first has to be loaded with credit and this can
be done in a number of ways. First, supervised loading
whereby a supervisor collects customers’ cash amounts
and loads the cards via a vending machine; the disad-
vantage to this method is that the handling of cash is still
involved and at least one person has to be employed to
do this job. Second, customers self-load their own cards
with a cash value before making their purchases. By
inserting the card into the loader a customer can check its
balance and increase the amount by feeding the appropri-
ate money into the machine; this method’s disadvantage
is that special loaders are required and cash is still han-
dled. Third, is the direct-debit loader linked to the wages
department so that a card holder may direct debit different
values from his/her salary; in this way cash handling is
eliminated completely.

• • 104

Contract, travel and public sector catering

(b) The advantages to the customer of card vending are that
it is a convenient method of payment; loose change does
not have to be carried, it is not ‘lost’ in the machine and,
overall, a faster service can be given.

(c) The card holders can be divided into user type groups
and these categories may then be separated into different
price bands. Vending machines payments can be broken
into cashless, free-vend and coin operated systems. This
enables different charges to be made for the same product,
for example for regular employees, temporary staff, free
vend for visitors, etc. Cash refunds can be given to users
giving up their cards, or money can be paid back into an
employee account; machines can also be programmed to
stop accepting stolen cards. Finally, the sales information
stored in these machines can be printed out by item, price
list or type of user, and a comparison between actual
and cash loaded on to the cards can be given; such up-
to-date information greatly aids financial control and cost
accounting.

2. Mixed product vending: Where the design of the machine
allows, different products may be vended together and com-
plement each other, for example, pre-packed snacks with car-
ton juices together form a substitute for a main meal at certain
times of the day. Smaller units, for example vending confec-
tionery, can also be attached to the side of the larger machines
and utilize their coin or card mechanism.

3. Fresh brew vending: Machines using fresh brew systems for
tea and coffee ensure that a better quality end product is dis-
pensed to the customer. In-cup drink machines where the
ingredients are already in the cup also offer better hygiene,
operation and servicing, control and range of products. Some
beverage machines are now capable of offering 100 different
selections for both hot and cold drinks and have capacities of
up to 1,000 cups.

4. Space economization: The efficient utilization of business space
in offices, factories, hospitals, industrial units, etc. is of great
importance today. This has led many operations to criti-
cally review their catering facilities and the space allocated
to them, particularly where a twenty-four hour service is
needed. In many situations vending is being used as a space
and cost saving alternative to installing traditional catering
services. Furthermore, the vending manufacturers themselves
are aware of the amount of space vending machines need,
and are researching ways of reducing their overall size yet
at the same time trying to increase the range and quality of
products they can offer.

5. Compatibility with cook-chill: The cook-chill method of food
preparation serves the vending industry well by allowing
plated meals to be prepared in advance and vended for later
consumption either in a chilled state, for example salads, cold
meats, pâtés, etc. or for use in conjunction with some type of
heating system, for example microwaves.

105 • •

Food and Beverage Management

Staffing • • • Vending has now established itself as a method of food service
Technology • • • that may be considered for many types of operations and situa-
tions. In some sectors of the catering industry it is employed as a
total feeding system, for example staff cafeterias and restrooms,
hospital canteens, etc. in others it is an economic alternative to
other types of catering service at different times of the day, for
example, night shifts in hospitals, twenty-four hour factories,
offices, etc.

The reduced labour costs is one of the biggest advantages of the
vending machines along with the availability of the product.
Operators can stock a large number of machines with a very
small number of staff and with very little training. However,
often, there are hidden costs such as maintenance costs.

Without advancements in technology vending machines would
not exists and similarly if technology did not evolve the con-
sumer would prefer alternative means of purchasing the goods.
Today technological advancements in stock control and mainte-
nance have enabled vending machines to become more reliable.
Telemetry and on-site hand-held systems have helped to reduce
the number of out-of-stock situations, or quickly identify mal-
functioning machines. With advancements in Internet technol-
ogy vending machines can be easily monitored for conditions
and levels of stock. Vending machine technology has improved
the storage conditions for perishable goods, and has enabled hot
food vending.

PUBLIC SECTOR The public sector has seen growth in prison catering, college and
Schools university, and public catering as well as the services. However,
catering in schools, healthcare and local authority has been in
• • 106 decline (Table 3.10).

The school meals catering service was formerly structured on
a dietary basis with a daily or weekly per capita allowance to
ensure that the children obtained adequate nutritional levels
from their meals. Most of the schools used to operate their din-
ing rooms on a family type service or a self-service basis with the
traditional ‘meat and two veg’ lunch being very much the norm.
There has been a shift away from this conventional arrange-
ment to the provision of a snack type lunch as an alternative to
or replacement for the main meal. Many schools now provide
‘snack meals’ such as baked potatoes, pizzas, sandwiches, rolls,

Contract, travel and public sector catering

2001 2003 2005 % change
2001–2005
Number
Number Number of
of of outlets %
outlets % outlets %

Business and industry 9,002 49.2 8,939 48.6 8,973 51 Ϫ0.3
• Business and 8,344 45.6 8,473 46.1 8,214 46.6 Ϫ1.6

industry 475 2.6 –– –– –
• Government and
59 0.3 347 1.9 597 3.4 911.9
agencya
• Department store 124 0.7 119 0.6 162 0.9 30.6
4,847 26.5 5,027 27.3 4,506 25.6 Ϫ7
staff 4,386 4,529 24.6 3,960 22.5
• Prisons 24 498 Ϫ9.7
State education 461 2.5 2.7 546 3.1 18.4
• School
• College and 813 4.4 919 5 754 4.3 Ϫ7.3
1,420 7.8 1,385 7.5 1,553 8.8 9.4
university
Independent schools 960 5.2 882 4.8 839 4.8 Ϫ12.6
Catering for the 455 2.5 465 2.5 369 2.1 Ϫ18.9

publicb 67 0.4 22 0.1 50 0.3 Ϫ25.4
Healthcare 438 2.4 395 2.1 420 2.4 Ϫ4.1
• NHS and trust
401 2.2 522 2.8 490 2.8 22.2
hospitals 543 3 477 2.6 291 1.7 Ϫ46.4
• Private hospitals 96 0.5 Ϫ22.7
• Private nursing 97 0.5 266 1.4 75 0.4 Ϫ49.7
312 1.7 90 0.5 157 0.9 Ϫ65.5
homes 116 0.6 25 0.1
Ministry of Defence 235 1.3 40 0.2 5.6
Local authority 18 0.1 19 0.1 Ϫ15.1
• Courts 238 1.3 202 1.1
• Police and fire
• Town hall 65 0.4 –– –– –
• Welfare 18,289 100 18,386 100 17,608 100 Ϫ3.7
Oil rigs, training

centres and
construction sites
Miscellaneous

Total

Source: BHA/Mintel Reports (December 2006)

a Change in reporting categories
b Excluding all events

Table 3.10
UK contract catering market segments, by number of outlets

pies, soups, yoghurts, etc. and the children may choose from this
selection in a normal cafeteria fashion.

Some areas have drastically cut their school meal service and
are simply providing dining-room space for the children to
bring in their own lunches from home. Whether this trend will

107 • •

Food and Beverage Management

continue in the future is debatable. It does seem likely, how-
ever, that now introduced, the snack type meal will remain as an
alternative to the traditional school meal. Many local education
authorities contract out this service to specialist contract cater-
ers. Celebrity Chef Jamie Oliver started his campaign for school
dinners in 2005 and his TV programme was quite influential in
government circles that promised increases in the school budget
to ensure a better quality of food in schools.

Catering in schools is about much more than simply providing meals for students. We are
responsible for ensuring that youngsters are educated about food and are provided with the
information that they need to help them make good healthy eating choices. It’s vital that stu-
dents are made aware of the importance of maintaining a healthy and balanced diet early on,
so that it becomes ingrained behaviour that they follow for the rest of their lives. We aim to
show students that good food and healthy eating is fun and interesting through events such live
cookery demonstrations in schools and cookery classes for parents and students which ena-
ble them to learn some basic hands-on cookery skills. From September 2007, the new school
meals standards introduced by the Government last term will come into force for food served in
schools other than lunch, so it’s important that we can give them a wide range of healthy and
appealing choices throughout the day and not just on our lunchtime menus.

Gill Ward, Scolarest Catering Manager at City of Norwich School, Norfolk.

Universities and colleges

All institutions of further and higher education provide some
form of catering facilities for the academic, administrative,
technical and secretarial staff as well as for full- and part-time
students and visitors. The catering service in this sector of the
industry suffers from an under-utilization of its facilities dur-
ing the three vacation periods and in many instances at the
weekends.

Universities are autonomous bodies and are responsible for
their own catering services. They are, however, publicly account-
able for their expenditure to the Higher Education Funding
Council for England (HEFCE) which allocates them funds on
behalf of the exchequer. The HEFCE’s policy on catering allows
for a subsidy on capital costs, that is, buildings and equipment,
‘landlord’s’ expenses and rent and rates where applicable. Apart
from a few special exemptions to named universities, they are
expected to break-even. University catering units have tradition-
ally been of two basic kinds: residential facilities attached to halls
that may serve breakfast and evening meals within an inclusive
price per term, and central facilities that are open to all students
and staff and usually serve lunches and snacks throughout the
day with beverages. These catering facilities have to compete
openly with the students’ union services and independently
staffed senior common rooms (Figure 3.11).

• • 108

Contract, travel and public sector catering

Figure 3.11 Residential students pay in advance for their board and lodg-
University catering. Photo ings. This method has been abandoned by many universities in
courtesy of Scolarest recent years who have provided reasonable kitchen facilities in
the residences to enable students to prepare and cook their own
Hospitals meals if they wish to. Others have introduced a pay-as-you-eat
system for residential students. Unfortunately, this has led to
reduced catering revenue from students.

Non-residential students are provided with an on-site catering
provision that has to compete against all other forms of locally
provided catering, with ease of accessibility and some level of
subsidy being the main attractions. Increasingly, caterers are
turning to ideas from the high street operations to attract and
keep their predominantly young adult clientele.

To offset the losses incurred and to achieve a position of
break-even in catering, universities have seen the advantages of
making their residential and catering facilities available at com-
mercial rates to outside bodies for meetings, conferences and for
holidays during the vacation periods.

Activity 3

Identify all catering outlets and functions in your university/college.
Does an in-house team deliver catering or is it outsourced to a

contract caterer?
Analyse the strengths and weaknesses of catering provision in

your university.

Hospital catering facilities have improved considerably over the
past ten to twenty years with the result that new hospitals in par-
ticular are benefiting from well planned and managed catering

109 • •

Food and Beverage Management

The services services. Hospital catering is a specialized form of catering as the
• • 110 patient is normally unable to move elsewhere and choose alter-
native facilities and therefore special attention must be given to
the food and beverages so that encouragement is given to eat the
meal provided.

The hospital catering service is normally structured on a per
capita allowance for patients but with staff paying for all of
their meals. A decentralized approach was used in many hospi-
tals where the patients’ food and beverages were portioned at
the point of delivery in the wards. This often resulted however,
in patients receiving cold, unappetizing meals because of the
time between the food being prepared and the patients actually
receiving it. This method of food service is commonly replaced
by a centralized approach that involves the preparation of the
patients’ trays in or close to the main production area. From
here they are transported by trucks or mechanical conveyors to
the various floors, and from there directly to the patients so that
there should be little delay between the food being plated and
served to the patient.

Another trend has seen hospital catering open for tender by
contract caterers where in many instances a centralized produc-
tion system for several nearby hospitals may have to be operated
to be viable.

In May 2001, the Better Hospital Food initiative was launched.
The programme’s aims were to:

● produce a comprehensive range of tasty, nutritious and inter-
esting recipes that every NHS hospital could use;

● re-design hospital printed menus to make them more acces-
sible and easier to understand;

● introduce twenty-four hour catering services to ensure food is
available night and day;

● ensure hot food is available in hospitals at both mid-day and
early evening mealtimes.

Perhaps evidence that caterers are committed on improving
the catering of the healthcare sector can be seen at the Hospital
Caterers Association, at a recent (26 April 2007) conference pro-
gramme. The catering experience and food nutrition are promi-
nent subjects as well as cultural and environmental issues in
hospital catering (hospitalcaterers.org).

The services include the armed forces: the Royal Navy, Army
and Royal Air Force; the police and fire service; and some gov-
ernment departments. The armed forces often have their own
specialist catering branches, for example the army catering is
provided by the Royal Logistics Corp. Civil service organiza-
tions such as the Metropolitan Police force also have their own
catering departments. The levels of food and beverage facilities
within the services vary from the large self-service cafeterias for

Contract, travel and public sector catering

Kevan Wallace MIOH, Assistant Hotel Services Manager Catering, Frimley Park Hospital NHS
Foundation Trust gives his insights in catering in hospitals.

The pace of change in hospital catering has been fast. Over the past six years, we have seen
the introduction of several initiatives, the best known being Better Hospital Food. This has been
largely successful and has achieved much. The spotlight has been firmly on catering in the NHS,
whether by contractor or by in-house teams. More attention has been paid to the quality of the
food provided to patients. Not only that, but the patient environment is now also a major focus,
making meals and mealtime much more a part of the healing process. Protected mealtimes,
in-ward and housekeeper facilities can really make a difference to patients on the road to recovery.

It is always a challenge to meet targets set by individual trusts and government, but cater-
ers in the NHS take great pride in what they achieve. The team at Frimley Park Hospital NHS
Foundation Trust has recently been awarded Hospitality Assured at their first attempt, and they
are only the second in the south-east to have achieved this.

Prisons the majority of personnel, to high-class traditional restaurants
for more senior members of staff. A considerable number of
functions are also held by the services leading to both small- and
large-scale banqueting arrangements.

There are over 9 million people detained in penal institutions
around the world and over 2 million of them are held in US
institutions whilst over 1.5 million in China. The population of
detainees in all penal institutions in England and Wales is more
than 75,000 and continues to grow. Working on a very limited
budget, the diet for the inmates is based upon fixed weekly
quantities of specific named food commodities with a small
weekly cash allowance per head for fresh meat and a further
separate weekly cash allowance per head for the local purchase

Figure 3.12
Prison catering. Photo courtesy
of Northern Ireland Prison
Service (Source: http://www.
niprisonservice.gov.uk)

111 • •

Food and Beverage Management

of dietary extras of which a proportion must be spent on fresh
fruit. The catering within the prisons is the responsibility of the
prison governor with delegated responsibility being given to
a catering officer, with much of the actual cooking and service
being done by the inmates themselves (Figure 3.12).

Summary

In this chapter we explored:

● Contract catering
● Catering in travel
● Catering in the public sector
● Trends in each sector
● An overview of the range of types of catering
● Major differences and similarities between the various

operations
● Management challenges in contract catering.

Review questions

1. What are the key differences between travel catering and
public sector?

2. What are the production and service styles commonly
used in event catering?

3. What are the key subsectors of travel catering?
4. List the key differences between sport venue catering and

leisure venue catering.
5. List the key differences between catering in the public sec-

tor and industrial catering.

Further study options

Case study: The big day

Juliana and Victor decided on their big day and wanted to
have a wedding reception that everyone would remember.
They had decided on a Pirates of the Caribbean theme for the
reception and wanted their menu to reflect the theme. Money
was no object and lobster and caviar would feature as well
as oysters and champagne to get the party started. When
they approached Franco the Hotel Banqueting Manager he
assured them that in their resort they would find everything
they needed and his staff would make sure that the day was
a success. The couple had identified a small island about

• • 112

Contract, travel and public sector catering

10 miles away from the resort and wanted to hold the main
reception there.

Although Franco and his team had never catered outside the
resort, Franco decided that he could not let this function slip his
hands. With 200 guests and an average expenditure of £40 per
cover he decided he would caterer for this function at all costs.

Getting the food and beverage to the island proved to be a
difficult task but with the help of his staff Franco and his team
were ready for the event, although Franco was slightly wor-
ried that he did not have the right equipment to keep all the
food at the correct temperatures. Nevertheless the reception
proved to be a success and the couple were overjoyed.

However, two days after the event 46 of the guests were ill
with food poisoning. The results from the local hospital will be
out tomorrow but everyone suspects it was the oysters and
the hotel is getting a lot of bad publicity.

Q1: If you were Franco what would you have done prior to
the event to ensure no risks were taken?

Q2: Now that the resort is getting bad publicity, what would
you advise Franco to do?

Further reading

Bernstein, D. (2005). When the Sous Chef is an Inkjet.
New York Times, (February 3). http://www.nytimes.
com/2005/02/03/technology/circuits/03chef.html/ (last
accessed 10th March 2008).

Brewin Dolphin http://www.brewindolphin.co.uk/ (accessed
2nd November 2006).

British Hospitality Association http://www.bha.org.uk/
(accessed 20th October 2006).

Durocher, J. (2001). Unplugged. Restaurant Business (January 1),
100(1), 79–80.

Feinstein, A.H. and Stefanelli, J.M. (1999). Technology applica-
tions in foodservice purchasing: A primer for foodservice
marketers. Journal of Restaurant and Foodservice Marketing,
3(2), 3–22. The Haworth Press.

Hospitalcaterers.org. http://www.hospitalcaterers.org/confer-
ence/programme.html (accessed 21st April 2007).

Karel, M. (2000). Tasks of food technology in the 21st century.
Food Technology (June), 54(6), 56–58. 60, 62, 64

Kühn, K. (2007). Delaware to name new Wembley executive chef,
Caterer and Hotelkeeper, http://www.caterersearch.com/
Articles/2007/04/12/312855/delaware-to-name-new-
wembley-executive-chef.html (accessed 21April 2007).

Mintel Reports, Cars – UK – September 2004: http://reports.
mintel.com/ (accessed 21st April 2007).

113 • •

Food and Beverage Management

Mintel Reports, Vending UK – March 2005: http://reports.
mintel.com/ (accessed 21st April 2007).

Mintel Reports, Cruises – International – September 2005:
http://reports.mintel.com/ (accessed 21st April 2007).

Mintel Reports, World’s Leading Outbound Markets –
December 2005: http://reports.mintel.com/ (accessed 21st
April 2007).

Mintel Reports, Contract Catering – UK – December 2006:
http://reports.mintel.com/ (accessed 21st April 2007).

Mintel Reports, Leisure Venue Catering – UK – March 2007:
http://reports.mintel.com/ (accessed 21st April 2007).

Mintel Reports, Onboard Catering – UK – May 2007: http://
reports.mintel.com/ (accessed 21st April 2007).

Narprail.org.http://www.narprail.org/cms/images/uploads/
FB_Econ_Final.pdf (accessed 19th April 2007).

World Stadiums http://www.worldstadiums.com (accessed
10th April 2007).

• • 114

CHAPTER 4

••••

Developing the

concept

Introduction

Starting a new business can be a daunting task for
any food and beverage manager/entrepreneur. In
London, UK there are around 100–120 closures per
year in 2002 to 2003 although these reduced to 60–65
in times of high economic growth such as 2005 and
2006 and although the numbers for new restaurant
openings are countering the closures (Akbar,
2007), one can not help but wonder why so many
establishments close, often within one or two years
of their operation. The answer could very well be that
many investors fail to understand their market and
often they rush into an investment without ensuring
that the potential is there. Often they allow their ‘Gut
Feeling’ to lead their business decisions without taking
any steps to minimize the risks involved. It is important
that the market is understood and that an initial
investment is undertaken to ensure that the much
larger investment into the project will be justified.
Understanding the first steps that are needed to take
in starting a new restaurant will give the reader an
insight into the food and beverage business and the
key issues that need to be taken into consideration.
This chapter aims to give an initial understanding
of some of the tools available to prospective food
and beverage managers and how current managers
approach a new operation (Table 4.1).

Food and Beverage Management

Chapter objectives

After working through this chapter you should be able to:

● Have an understanding of a restaurant feasibility
study.

● Understand the main parts of a restaurant business
plan.

● Have a basic understanding of ways that an operation can
be financed.

● Have a basic knowledge of facility design and layout.

Company Brand name Number Number of Number Change
of outlets
2002 outlets of outlets 2002–

2004 2006 2006

Bank Restaurant Zinc Bar & Grill 4 6 51
group 3 3 3–
Individually 7 6 81
Caprice Holdings named – – 9–
Ltd/Richard caring – – 6–
Individually named – – 3–
Clapham House
Group Gourmet Burger 18 18 19 1
Kitchen 63 61 53 Ϫ10
Conran
Restaurants Real Greek 13 11 14 1
Bombay Bicycle 9 5 4 Ϫ5
Craftbutton– 3 3 63
Paramount plc Club 1 1 1–
(restaurants) 7 7 7–
Gaucho Grill Individually – 1 1–
Restaurants named
Caffé Uno

Chez Gérard/
Le Petit

Chez Gérard/
Brasserie

Chez Gérard
Livebait
Bertorelli/Café

Bertorelli
Café Fish
Gaucho Grill

Destino

Table 4.1
Examples of main restaurant operations, by outlet numbers

• • 116

Developing the concept

Company Brand name Number Number of Number Change
of outlets
2002 outlets of outlets 2002–

2004 2006 2006

La Tasca La Tasca 17 35 53 36
Restaurants
La Viña – – 3–
Living Ventures Est Est Est 22 19 17 Ϫ5
The living room – – 13 –
Loch Fyne The bar and grill – – 2–
Restaurants Loch Fyne 17 23 25 8

Ma Potters Le Petit Blanc – 4 5–
MA Potters – – 8–
Mitchells &
Butlers bar and – – 7–
restaurant
Noble House Ma Potters 13 15 15 2
Leisure Chargrill
Browns 7 8 7–
Punch Taverns plc
(formerly the Yellow River 7 6 7–
Spirit Group) Café
– 21 11 –
Rank Oriental – 14 10 –
The Restaurant Restaurant
Group Group 35 31 33 Ϫ2

Town Centre Arbuckles 6 8 71
Restaurant Jim Thompson’s 67 86 105 38
Group 33 30 30 Ϫ3
(JT’s) 26 25 29 3
Tragus Holdings Old Orleans – – 17 –
– – 5–
Urban Dining Group Hard Rock Cafe –
Whitbread Frankie & Benny’s 8 9–
Source: Mintel, 2006 Garfunkel’s –
Chiquito’s – 5 4–
Blubeckers – – 82 –
Edwinns Brasseries – – 3–
Auberge – – 1–
– – 1–
Azzurro 40 – 30 –
Café Rouge 41 46 6
Abbaye
Oriel
Leadenhall Wine bar
Tootsies
T.G.I. Friday’s

Table 4.1
Continued

117 • •

Food and Beverage Management

Menu
design

Pricing Restaurant
design
Available
resources Restaurant
concept

Atmosphere

Type of Locations
restaurant

Figure 4.1 Restaurants are businesses that require a creative flair and pas-
Key restaurant concept sion, a good concept is often what separates success from fail-
considerations ure. Sometimes the concept will become apparent only after the
feasibility study is conducted, but most often the future restaura-
THE CONCEPT teur has a good idea as to what she wants to achieve, based on
his/her experience and available talent.
• • 118
The problem arises if the restaurateur is so engrossed in his/
her concept that even if the feasibility study clearly shows that
the concept is unlikely to work in a particular location they
go ahead anyway. There are many examples of concepts that
although successful with their first operation they then branched
out and found failure when trying to establish a chain of restaur-
ants. For example, the cases of Fish! and Chez Gerard, with
extremely successful original concepts they expanded too quick
and have had to close a number of their restaurants. A good res-
taurateur must always keep an eye on the pulse of the market
and plan ahead before making key decisions that will affect the
business whilst remaining flexible enough to be able to respond
to sudden market changes (Figure 4.1).

In choosing a concept there are three primary categories.

1. Restaurants that rely on low margins but high volume of sales
(fast food, takeaways, etc).

2. Mid-scale restaurants that offer a full meal but at relatively
low prices.

3. Upscale restaurants that rely on high margins (see Michelin
star restaurants).

Furthermore, the restaurant may be themed with food from a
particular ethnicity such as Chinese, Japanese, Korean, Italian,
Greek, Mexican, Caribbean, English, French, German, Indian and
Thai to name a few. In the UK, the two most popular Ethnic type
of food is Chinese and Indian (Mintel).

Developing the concept

The Acorn House Restaurant is a great example of a restaurant concept development
focusing on sustainability

Waste management, water usage and energy costs are the three biggest challenges we face
today in restaurant management. Governments will charge more and more for commercial waste,
it is therefore imperative that we find new and
innovative ways to ensure wastage is minimized.

Water is the most underrated resource in our
industry. In the future water costs will prob-
ably rise to such a degree that it will have a
detrimental effect on restaurant profit margins.
Restauranteurs should think ahead and man-
age their water usage effectively, today.

Energy costs will continue to rise and energy
efficient restaurants will not be a luxury but
a necessity in the near future.

At Acorn House Restaurant (AHR) we carefully
consider our suppliers, our use of water and
energy, as well as our waste management and
the transport of our goods. What we do should Arthur Potts Dawson
not be considered special or different; we are Co-Director Bliss Restaurant Consultancy
doing what is obvious in conserving the environ- Executive Chef Acorn House Restaurant
ment whilst still running a successful business.

Gaps in the market are always a good place to start when
considering the concept you wish to develop in the area. If for
example, your local area has a good number of Chinese restaurants,
you might wish to consider an alternative location or change your
theme completely. Restaurant owners tend to consider how formal
or informal they want their establishment to be. Then decide on
creating the right atmosphere by carefully considering not only the
interior design of the restaurant but the menu items featured for the
furniture and cutlery crockery used as well as lighting, the acoustics
and type of music of the restaurant may feature. Another important
consideration is that of selling alcoholic beverages. This decision
not only affects the overall feel of the restaurant but also the kind of
license the restauranteur will need to possess. The Menu is the next
key decision and Chapter 6 covers the Menu in some detail. Pricing
is of course of paramount importance as overpriced menu items or
menu items that offer no profit may set the business in a difficult
financial position. One final decision is whether the restaurant will
offer takeaway or delivery service. For some restaurants food deliv-
eries often match revenue generated by sit in customers.

Activity 1

Identify all major Ethnic restaurants in your local area.
Ask a minimum of five of your friends/colleagues about any

Ethnic restaurants they have visited in the last year.
Is their answer what you expected given the number of Ethnic

restaurants

119 • •

Food and Beverage Management

Feasibility study stages Location

Local market area

Competition

Industry trends
Financial
projections
Concept
refinement

Figure 4.2
The feasibility study

FEASIBILITY STUDY

A key tool to help to reach the decision as to whether a concept
is likely to be a success or not is the feasibility study. A feasibility
study is a document that is developed after the restaurateur has
studied the market and analysed the economy so that he/she has a
good knowledge of the environment that the business is proposed
to be developed in and the expected return on the investment.

Although there are many guides about conducting feasibility
studies the key areas that need to be covered remain largely the
same. Here we propose an approach to the feasibility study from
the specific to the more generic. Since the most difficult and time
consuming task can be the collection of data, starting with the
location might save valuable time and resources (Figure 4.2.)

Location

There are two major questions that any future restaurateur wishes
to address. What type of restaurant should I open? Where do
I open it? The first question is often addressed and redefined by
the completion of the feasibility study and the answer to the sec-
ond question can be the difference between success and failure.
Committing resources to a specific site simply because it has a
surprisingly low lease without considering the market or the com-
patibility of the location to concept is a mistake made far too often.

No matter how great the concept of a restaurant is, if it is not
accessible it can easily be an empty restaurant. For example,
during peak summer times potential customers would prefer to
walk in the side of the street that offers shadow if the restaurant
is positioned at the wrong side of the road customers would not
even consider stopping to look at the menu. A restaurant with
limited or no parking that requires a long walk could deter
potential customers. Disabled access must also be considered as
well as how close the restaurant is to major streets.

A restaurant must also be visible, many restaurants rely on walk
in business, if the restaurant cannot be seen or it is hard to find it

• • 120

Local market area Developing the concept
Competition
will be very hard to build a base market for it. Ensuring that signs
can be put up to guide potential customers is important. External
lighting that both attracts and guides the customer is essential.
The building appearance can be a deterrent or an attraction.

How close is the restaurant to potential business sources such as
offices, hospitals or hotels as well as how close to potential com-
petitors. It is a good idea to project potential customers by market
segment based on distance from the restaurant. The traffic volume
can also be a key factor so looking out for traffic and pedestrian
patterns as well as identifying peak and off-peak periods is useful.

There are other considerations such as future developments in
the area, safety environmental issues and restrictions to name a
few. It is important that a complete profile of the location and the
immediate area is constructed to ensure that the site is a good
match for the type of restaurant intended.

Having the location in mind makes it easier to define the geo-
graphic size of the market. Overestimating the amount of miles
potential customers are willing to travel to get to the business is a
common mistake. It is often better to have a pessimistic approach
rather than an over optimistic. The next step involves obtain-
ing demographic data about the people that reside or work in
the area specified. Demographics such as age, gender, education
and income as well as business growth trends, tourist visits, etc.
can be obtained through local champers of commerce, business
development centres, market reports and local economic devel-
opment agencies. See Chapter 9 for more on this topic.

Consultancy firms often produce reports that illustrate dining
out behaviour and preferences such as menu item preference,
dining frequency, preferred restaurants, etc. Such reports can
help to understand the economic characteristics of the popula-
tion and further refine the concept.

Analysing the competition enables to analyse the demand and
opportunities in the market. A common mistake is to only ana-
lyse restaurants that fit the particular concept. So a fast-food
operator might be tempted to cut corners and only analyse simi-
lar operations in the market and avoid investigating other type
of restaurants. It is important to remember that each restaurant
is competing for customers disposable income and disposable
time therefore all food and beverage operators no matter what
their concept is will affect the business. By visiting existing res-
taurants one can gain access to valuable information such as
the type of menu offered, quality of food and service, pricing
policies and even estimate the turnover of the competitor. How
many of your competitors are independently owned and how
many are part of a chain that can affect your profitability. Chain
restaurants, for example, will have an opportunity to lower
prices as economies of scale enable them to buy goods at lower

121 • •

Food and Beverage Management

Industry trends rates. How well can one compete if the same product it offered
by a competitor at a far lower price? It is important to also look
out for restaurant reviews in the local press or travel guides the
reputation the restaurant may have. Existing restaurants are
not the only ones one must consider. Recent restaurant closures
should be investigated and trying to find the reasons behind the
closures will give an insight to the local market. Also any infor-
mation about future competitors can be extremely important.
If for example, you were expecting to be the only seafood res-
taur-ant in town but you find that such concepts have opened
and closed before or that such a restaurant will be opening soon
just a few streets away from your location, you may decide to
either find a new location, or rethink the concept.

Industry trends can help realize early on potential threats or
opportunities that might exist. For example, in times of high eco-
nomic growth the industry might enjoy higher turnovers as peo-
ple will tend to eat out more often. It is important to look at how
the market demand has been developing over the past three to
five years, what types of restaurants seem to be doing well. What
trends are there in customer eating and drinking habits? We may
see a move away from junk food to healthy eating or an increase in
the market segment for vegetarians or vegans. There may be new
developments in areas such as food production, customer serv-
ice, pricing, government regulations to name a few. For example,
if you wanted to open an Organic restaurant somewhere in

Jane Renton, General Manager of the Jumeirah Lowndes Hotel, comments on how the smoking
ban in the UK influenced the design of their Mimosa Bar and Restaurant.

We recently (November 2006) launched Jumeirah Lowndes Hotel after an £8.5 million renova-
tions project. As the smoking ban of all pubs and private members’ clubs in England will affect
many hospitality business, it was important for us to retain an al fresco theme for our Mimosa Bar
and Restaurant. Our focus is on fresh, seasonal ingredients with vibrant colours and clean fla-
vours. The theme works as Mimosa’s most coveted tables are our outdoors tables, where guests
can relax and soak up the cosmopolitan atmosphere on Lowndes Square.

• • 122

Developing the concept

Financial projections Europe you would have to abide with the EU regulations that
Refining the concept enable you to use the label ‘Organic’.

Once all the data is collected and location, market, competi-
tion and industry has been analysed the restaurateur is ready to
make some projections to estimate the business turnover and be
more specific about expected numbers in areas such as customer
average expenditure, number of covers and potential costs.

It is advisable to look at financial projections using weekly,
monthly and annual projections as seasonality will affect the busi-
ness and splitting the year to a number of seasons will make it
easier to forecast more accurately. Restaurants are easily affected
also by the day of the week, often a restaurant will find that a
particular day is the busiest whilst another might be the quiet
day. For a new restaurant this might be hard to predict although
competitor analysis should have helped. If the restaurant is an
existing one historical data makes it easier to do forecasts.

Existing restaurants may wish to do a feasibility study if they
consider expanding the business or wish to open a second or
third operation.

The information gained so far will enable the restaurateur to
evaluate the business idea and come to conclusions as to whether
it is a feasible operation or not. The concept can then be rejected
or refined in order to achieve better returns on the investment.

Jones and Merricks (1994) categorize concept development in
food service as new concepts, concepts that although not new
are entering a market for the first time, modified concepts to pro-
vide greater consumer satisfaction, repositioned concepts that
target new market segments and extended concepts that aim to
appeal to a wider market segment. The key to the concept is cus-
tomer preference and for most type of concepts this can be rela-
tively easy to predict, however for brand new concepts that have
never been tested before it may not be as easy. Often with a new
concept the consumer may not know that it would prefer such
a product so although asking the consumer may yield negative
results, when the product is actually offered it can be found that
the consumer actually likes the product.

THE BUSINESS PLAN

The business plan is a document that spells out a company’s
expected course of action for a specified period, usually includ-
ing a detailed listing and analysis of risks and uncertainties.
For the small business, it examines the proposed products, the
market, the industry, the management policies, the marketing
policies, production needs and financial needs. It is worth not-
ing that often there is confusion between a restaurant feasibility

123 • •

Food and Beverage Management

Market research
Financial

Management team Unique Operations
selling
point

Figure 4.3 Projections
Elements of a restaurant Competition
business plan

Executive summary study and the business plan, this may be so because a number
• • 124 of information that become apparent in the feasibility study will
then be used in the development of the business plan. In the
business plan the manager addresses significant issues that have
been identified in the feasibility study and states how he/she is
going to address them.

Who will be reading the business plan can have an effect on
how it is written, although the key information remains the
same, there is emphasis in different sections of the plan if the
operator goes for bank financing (debt finance) as opposed to
investors (equity finance). A bank may be looking for a solid plan
and assets that will ensure repayments of the loan whilst poten-
tial investors may be looking for high returns on investment.

A well-developed business plan makes all the difference when
approaching potential investors (Figure 4.3). Investors and lend-
ers will request a copy of the business plan and it is often one of
the key tools that helps them make a decision as to whether they
will invest or not. The heart of a good business plan is the unique
differentiation point. The key innovation that makes the business
stand out and ensures potential investors will consider financing
the business. The following sections illustrate the main parts of a
business plan.

Although this section is the very first of a business plan, it is
always a good idea for this to be written last so that it includes all
the key points that the operator wishes to put across to potential
investors. Most investors will spend no more than five minutes
considering a proposal and if the executive summary fails to cap-
ture their imagination then it is certain that they will not attempt
to read further into the document. The key areas that a good
executive summary explores are the company name, the type
of restaurant, its unique selling point, the growth of the market and
recent trends, the management team and its strengths, financing

Developing the concept

requirements and projections, how the funds will be used and an
outline of the operations and projected return on investment.

Restaurant concept description

The second part of the business plan provides a more detailed
overview of the company and the nature of the product/service
offering. Typically a sample menu is included. It often includes
the history of the concept development the restaurants proposed
legal form, for example will it be a limited company, a partner-
ship or single ownership and a mission statement. A time line of
key events, for example, how long it will take to have the oper-
ation up and running. The description of the concept, and any
advantages the concept may have over the competition.

Market analysis

In this section, the information that was gathered in the feasibility
study can be utilized. The location can be described, the local mar-
ket can be defined and analysed, as well as industry trends and
actual and potential competition. Any market threats that have
been identified should be included here. Potential investors or
lenders expect to see an analysis of the weaknesses as well as the
strengths, and no weaknesses could mean that the plan is overop-
timistic and the researchers may have missed critical information.

PESTLE analysis

Another tool that is often used is the analysis of the external
environment to the organization is the PESTLE. The acronym
stands for Political, Economic, Social, Technological, Legal and
Environmental issues and factors that must be taken into consid-
eration when developing the business plan. This particular tool
enables the user to see the bigger picture when deciding how to
proceed with their restaurant. Here is a list of some issues under
each heading that readers may wish to consider, these are just
examples and the lists are far from conclusive but will help the
reader further understand the use of the PESTLE tool.

● Political issues (Government policies, Local council and trad-
ing policies, Terrorism, War, Political trends).

● Economic (Oversees economy strength, Home economy
strength, Local economy strength, Inflation, Distribution trends,
Taxation, Unemployment rates).

● Social (Lifestyle changes, Consumer behaviour changes,
Population changes, Demographics).

● Technological (New and emerging technologies, Innovative
technologies, Communication technologies, Production tech-
nologies, Service technologies).

● Legal (Local and country legislation, International or EU legis-
lation, Licensing legislation, Employment law, Environmental
legislation).

● Environmental (Sustainability issues, International and local
regulations, Consumer attitudes).

125 • •

Food and Beverage Management

Internal Positive Negative
External
Strengths Weaknesses
Table 4.2 Reputation Low profit margins
Example of a Restaurant Strong customer base High employee
SWOT analysis Unique menu
turnover
Opportunities
Open another outlet Threats
Future major conference New competitor
Change in legislation

SWOT analysis

Often the strengths, weaknesses, opportunities and threats
(SWOT) of the proposed operation will be analysed as part of
the market planning process. SWOT involves a systematic analy-
sis of all aspects of the operation, both internally and externally.
Strengths and weaknesses are often referred to as internal, oppor-
tunities and threats as external.

Taking a fast-food operation as an example, one of its inherent
strengths may be a product’s quality: customers know that from
one purchase to another, they will always receive the same stand-
ard quality product. A weakness, however, may be in the limited
menu choice available, or the design of the take-away pack-
aging which does not keep the food at the correct temperature
for a long enough time. Opportunities may exist for the extension
of the menu range by offering additional products, sauces and
accompaniments without having the need to purchase additional
capital intensive production equipment, or to seek new and more
efficient packaging within specific cost standards. Threats may
be in the form of competition from other fast-food operators, or
from a dramatic increase in the cost of a major raw material item
to the operation, which would affect the cost of the product to
the customer and the sales mix to the operation.

SWOT’s use as a management tool is in its comprehensive
analysis of all aspects of an organization. It would, therefore,
include a detailed review of all the marketing functions dis-
cussed in Chapter 9, and in particular in the formulation of the
marketing mix (Table 4.2).

The management team

This is an important section to investors and lenders. How
strong the management team is will greatly affect their deci-
sion. If for example, Gordon Ramsey would approach a bank
for funding of a new venture his profile alone may be an asset
strong enough for the bank to finance the operation. It is import-
ant that this section illustrates that the management team can
effectively run the business and that their collective experience
can guarantee a successful project. This is the section where the

• • 126

Developing the concept

background of the management team members is illustrated, the
experience they have in the field of food and beverage manage-
ment and what their responsibilities are in this particular project.
The organizational structure is illustrated, the type of ownership of
the business and who will be in the board of directors, and their
experience.

Operations

This part of the plan establishes how the operation will be run
and will illustrate the strategies required to implement the busi-
ness plan. Associated costs will become apparent here as well
as service style and standards, production standards and qual-
ity control. More specifically the operations plan includes a
marketing strategy, a production plan, a service plan, personnel
description and customer support.

Business threats

Potential threats that may affect the company are disclosed. By
disclosing such possibilities, the restaurateur is letting the reader
know up-front that there are risks associated with the business.
Potential investors appreciate such honesty and expert business-
men will expect business risks been included in the business
plan as a norm. Some of the areas that should be covered are
external and internal threats, insurance provisions and contin-
gency plans.

Financial projections

If the business does not make sense financially then there would
be no reason as to why one should invest. The financial reports
should show a good understanding of the business and its viabil-
ity. New businesses can also show forecasts but existing compa-
nies should also show three to five years of previous actual data.
The expected financial statements are normally a profit and loss
statement, statement of cash flow and a balance sheet (Figures 4.4
and 4.5). Forecasts are shown in no less than five years. Financial
projections are available by month, quarter and annual reports.
A break-even analysis is also normally included.

Appendix

In this section, the restaurateur normally includes any support-
ing information that should be made available to the reader.
Examples of such information can be competitor menus, pri-
mary data collected such as customer completed questionnaires,
examples of menu, promotional materials and advertisements.

FINANCING THE OPERATION

Depending on the size of the business and the experience of the
management team there can be a number of avenues available to

127 • •

Food and Beverage Management

2007 2006 2005

(Sterling in millions) USAR

OPERATING ACTIVITIES £479 £400 £390 Summary Statement of Income
Net Income........................................................................................................................ The Tsolias Taverna
Adjustments to reconcile to cash provided by operations: 195 162 140
133 87 76 For the year ended December 31, 2007
Depreciation and amortization..................................................................................... Ϫ195 Ϫ102 28
Income taxes................................................................................................................ 19 Sales: 1,045,800 75.85%
Timeshare activity, net................................................................................................. 48 Ϫ22 Food 333,000 24.15%
Other............................................................................................................................ Ϫ126 Beverage
Working capital changes: Ϫ53 Ϫ17 Ϫ104
Accounts receivable..................................................................................................... Ϫ4 Ϫ38 15 Total Sales 1,378,800 100.00%
Inventories.................................................................................................................... 28 326
Other current assets.................................................................................................... 219 711 Ϫ16 Cost of Sales: 448,000 32.49%
Accounts payable and accruals................................................................................... 850 98 Food 85,200 6.18%
Cash provided by operations............................................................................................ Beverage
605 533,200 38.67%
INVESTING ACTIVITIES Total Cost of Sales
Capital expenditures.........................................................................................................
Acquisitions....................................................................................................................... Other Income 5,100 0.37%
Dispositions.......................................................................................................................
Loan advances.................................................................................................................. Ϫ1,095 Ϫ929 Ϫ937 Gross Profit 850,700 61.70%
Loan collections and sales................................................................................................ – Ϫ61 Ϫ48
Other................................................................................................................................. 436 332 Operating Expenses: 332,200 24.09%
Cash used in investing activities....................................................................................... 742 Ϫ48 Salaries and Wages 57,440 4.17%
Ϫ389 Ϫ144 169 Employee Benefits 88,440 6.41%
FINANCING ACTIVITIES 54 Direct Operating Expenses 14,200 1.03%
Commercial paper, net...................................................................................................... 93 Ϫ192 Music and Entertainment 30,000 2.18%
Issuance of long-term debt............................................................................................... Ϫ377 Ϫ143 Marketing 37,560 2.72%
Repayment of long-term debt........................................................................................... Ϫ724 Utility Servises 56,400 4.09%
Redemption of convertible subordinated debt.................................................................. Ϫ1,026 Ϫ787 General and Administrative Expenses 28,600 2.07%
Issuance of Class A common stock.................................................................................. Repairs and Maintenance 82,200 5.96%
Dividends paid................................................................................................................... 46 355 426 Occupancy Costs 31,200 2.26%
Purchase of treasury stock............................................................................................... 338 366 868
Advances (to) from Old Marriott........................................................................................ Ϫ26 Ϫ63 Ϫ473 Depreciation 758,240 54.99%
Cash provided by financing activities................................................................................ Ϫ120
- 43 - Total Operating Expenses
58 Ϫ52 15
Ϫ55 Ϫ354 Ϫ37 Operating Income 92,460 6.71%
Ϫ340 Ϫ398
- Ϫ100 Interest 21,600 1.57%
-
175 301
21

(DECREASE) INCREASE IN CASH AND EQUIVALENTS............................................. Ϫ155 99 182 Income Before Income Taxes 70,860 5.14%
CASH AND EQUIVALENTS, beginning of year............................................................. 489 390 208 Income Taxes 24,801 1.80%
CASH AND EQUIVALENTS, end of year........................................................................ £ 334 £ 489 £ 390
Net Income 46,059 3.34%

Figure 4.4 Example of an income statement and a cash flow statement

End of December, 2007 and December, 2006 2007 2006
(Sterling in millions)
Assets 334 £ 489
Current assets 728 740

Cash and equivalents...................................................................... £ 97 93
Accounts and notes receivable....................................................... 220
Inventories, at lower of average cost or market.............................. 197
Prepaid taxes.................................................................................. 59 58
Other...............................................................................................
1,415 1,600
Property and equipment.......................................................................
Intangible assets.................................................................................. 3,241 2,845
Investments in affiliates........................................................................ 1,833 1,820
Notes and other receivables................................................................
Other.................................................................................................... 747 294
661 473
£ 340 292

Liabilities and Shareholders' Equity 8,237 £ 7,324
Current liabilities
660 £ 628
Accounts payable............................................................................ £ 440 399
Accrued payroll and benefits...........................................................
Self-insurance................................................................................. 27 36
Other payables and accruals........................................................... 790
680
Long-term debt.....................................................................................
Self-insurance...................................................................................... 1,917 1,743
Other long-term liabilities..................................................................... 2,016 1,676
Shareholders' equity
122 142
ESOP preferred stock..................................................................... 915 855
Class A common stock, 255.6 million shares issued......................
Additional paid-in capital................................................................. - -
Retained earnings........................................................................... 3 3
Unearned ESOP shares.................................................................. 3,590 2,738
Treasury stock, at cost.................................................................... 851 508
Accumulated other comprehensive income.................................... Ϫ679 -
Ϫ454 Ϫ305
£ Ϫ44 Ϫ36

3,267 2,908

8,237 £ 7,324

Figure 4.5
Example of a balance sheet

• • 128